BIOMASS ENERGY

Plan Creations Co, the manufacturer of Plan Toys wooden educational toys, will invest 350 million baht to build its own biomass power plant in the southern province of Trang next year.

Managing director Wichai Taytiwat said construction of the biomass gasification and power plant had already begun and was due to finish in November next year. The plant will generate about five megawatts of electricity. Some of the output will be supplied to its toy factory nearby and the rest will be sold to the local electricity authority to earn 70-80 million baht per year.

The biomass power plant will use about 120 tonnes of sawdust and tree roots per day. Since the company’s wooden toy factory in Trang can produce only 85 tonnes of sawdust a day from toy production, it will buy sawdust and tree roots from local sawmills in nearby areas.

“This move will fulfil our green toy objective _ from using green materials to having green manufacturing. It will also help us save electricity costs as we can now generate our own power,” said Mr Wichai.

Currently, Plan Creations pays about 18 million baht a year in electricity bills.

About 95% of the company’s toy production capacity is exported to 65 countries and only 5% sold locally, so the company has begun to feel the pinch from the strengthening baht.

Mr Wichai said the company decided to buy forward cover to hedge risks from the fluctuation of currency exchange rates and reduce costs by shortening the production work process. New automated machinery has been installed and product designs are being adjusted to be less complicated to minimise the use of raw materials.

Total sales of Plan Toys in 2009 were US$13 million, down by 20% because of the global economic crisis. This year, the sales will pick up by 15% to $15-16 million as several economies, which are its export markets, have recovered. Next year, the company expects sales will rise by 20%.

To achieve its goal, the company invested 300 million baht last year to expand annual production capacity at its Trang factory to 5 million pieces from 3 million. With additional capacity, it will supply more toys locally, expecting the proportion of domestic sales to double to 10% of total sales next year.

At the same time, it will use its marketing arm, Plantoy Inc (USA), to penetrate new markets particularly in South America such as Brazil and Chile.

About 10 companies in Brazil want to be distributors for Plan Toys and the company will make its picks next year.

Currently, Plan Toys has three rival brands: Haba and Hape from Germany, and Brio from Sweden. Wooden toys from China have not affected the wooden toy business of Plan Toys, which positions itself in the premium market.

“China is more advanced in toy production because many well-known wooden toy firms have set up their factories over there and transferred the technology to Chinese toymakers,” Mr Wichai said.

Therefore, the company hopes to stay ahead of the competition by using creative designs. Now, Thai-made toy products have been copied the most in the world market.